Alderman Moore's Statement on the Infrastructure Trust

Yesterday the City Council met to consider Mayor Rahm Emanuel's proposed Infrastructure Trust, which allows for another method of funding major infrastructure improvements in the City. For a copy of the ordinance, visit:

The ordinance is termed a "Substitute Ordinance" because it is a substitute for the original ordinance, which was introduced six weeks ago. The substitute ordinance, which is the result of weeks of negotiation between members of the City Council and the Mayor, represents a significant improvement over the original proposal. It gives the City Council final authority to approve all city-related projects, adds a City Council representative to the Trust and includes additional protections to ensure accountability and transparency.

In summary, I voted to support the formation of theInfrastructure Trust because it provides an importantalternative for funding needed infrastructure improvements inour city at a time when traditional sources for infrastructurefunding are becoming less available. As a long-time advocate for good government, I am confident the ordinance contains sufficient safeguards to protect the taxpayers and guard against fraud and corruption.

I want you to understand my reasons for supporting theInfrastructure Trust. For a transcript of my remarks,which I delivered yesterday during the City Council debate onthe measure, visit:

I know it's lengthy, but a lot has been written about this unique proposal, and my support for it requires a thorough explanation. Please feel free to post your questions and comments here or e-mail me at ward49@cityofchicago.org.

"It gives the City Council final authority to approve all city-related projects,..."

To be clear it is not all city-related projects - just any transaction to be undertaken by the Trust that seeks to utilize present or anticipated funds, revenues, assets or properties of the City.

So it is possible for the trust to undertake projects in the city without council approval.

I actually like the idea of the Trust Joe, I think it was rather inventive in a time when clearly Springfield or DC can't be relied upon to pass new contstruction bills.

I am just not as confident (as clearly you are) that the ordinance contained sufficient safeguards for taxpayers. We have no idea what the Trust is actually going to spend money on. Listening to the debate yesterday I heard everything from Broadband to low income housing to your idea CTA improvements.

The thing is we have no idea, neither does anyone on the city council. Yet the council did pass an ordinance that allows 4 mayor appointees and one Alderman to potentially approve billions in infrastructure improvements without full council approval.

Further the Trust investors are going to expect a return, this group will be committing the city residents to future debt, that could be tied to fare and fee increases. In an article today they quoted you as saying the CTA improvements you touted on the floor could result in fare increases.

I like the idea of the Trust, just wish you and our fellow alderman would have held out for more accountability measures, like the ones being pushed by the Better Government Association and some of your progressive colleagues.

Since it is passed now, all we can do is hope the 4 unelected trust board members involved are ethical and make the right decisions. That is not exactly the position I prefer to be in.

Just to clarify, "city-related" means excluding any infrastruture spending related to the public school system, the parks system and the transportation system. This information comes from Tribune articles I've read this week. These systems are considered "sister" agencies. The mayor claims that the city has no legal right to demand council approval for infrastructure projects with the sister agencies anyway, but city taxpayer funds are just as involved, and the city makes legal decisions related to these sister agencies all the time. In criticisms of the Infrastructure Trust, many commentators in the media, as well as the 7 dissenting aldermen, have pointed out that this kind of oversight is possible and is used in similar kinds of ordinances around the country, including the federal government. So it's a big problem that a large bulk of Chicago's private infrastructure spending will not be overseen by city council.

OK, so I just read the "Infrastructure Trust" ordinance that was recently passed 41-7-2 by the city council and I'm left smh. Where is the "not to exceed" $2.5 million "seed" money coming from? Who are these "investors" who will be "investing" (is this a euphemism for "loan," Joe?) in the important infrastructure projects? And if these "investments" are not to be secured by the "City's full faith and credit," (I'm not even sure what that means), then what's the collateral? Muni bonds (which probably aren't worth much more than the paper they're printed on)? Percentage ownership of the property investors are investing in?

I'm not a developer and am relatively ignorant about city politics, so my questions may seem really dumb to those of you who are more knowledgeable about such things. Can someone please explain to me, in simple terms, how this trust is going to enable important infrastructure projects to get done without further taxing citizens--now or in the future? John Kass predicts payments will come due for these loans long after Mayor Emanuel has left City Hall for whatever Washington appointment he winds up fulfilling. http://www.chicagotribune.com/news/columnists/ct-met-kass-0425-20120425,0,6053373.column (I have to admit I chuckled at his reference to Emanuel supporters as "Rahmulans"--you'd have to be a Trekkie to understand).

And, in a state and city that is perceived to be one of the most corrupt in the country, you'd think Mayor Emanuel would be especially careful to provide oversight to this new way of appropriations. Many people are saying the revised ordinance doesn't go far enough.

It's 1 am and I'm still awake so maybe I'll get some of these questions answered as I wade through Joe's transcript of his 16-minute speech before the city council in support of the trust. In the meantime, I welcome any insights you'd care to provide about how this whole thing works. thanks.

So, I just read the transcripts of Ald. Moore's remarks and I guess it didn't really answer any of my questions... but it did make me think of a couple of more questions! ;-)

It sounds as if you guys believe you'll be able to tap into grant money for projects by forming this trust? Really? Are you hiring grant writers to prospect and write proposals? I have to admit it's a concept my brain is having a hard time wrapping itself around. We can't tax businesses enough to generate the revenue for infrastructure projects, but there are foundations so well endowed these days that they could actually help fund multi-million dollar capital improvements?! wow.

If muni bonds WON'T be used as collateral to secure infrastructure loans, what will? I suspect it's something very obvious that people who know more about such things will simply take for granted. I guess I need someone to hold my hand and guide me through this new paradigm. thanks.

Kyle, Carl and Phoebe, thanks for your comments. I'm going to respond separately to each of you. Kyle, you state that the ordinance "allows 4 mayor appointees and one Alderman to potentially approve billions in infrastructure improvements without full council approval." That's not true, at least with respect to City of Chicago projects. The ordinance provides that the City Council will have final sign-of on any project that uses City funds, revenues, assets or properties. |

I acknowledge the City Council will have no authority over projects involving city sister agencies, such as the CTA, Board of Education, Park District and the CHA, but that's always been the case. The City Council has never had authority over those agencies. Rightly or wrongly, the Illinois General Assembly long ago established those agencies as separate and independent bodies with their own governing boards. The City Council has never been able to veto funding decisions of those boards. The City Council cannot by legislative fiat suddenly take over the funding decisions of those agencies.

The Mayor to his credit adopted the overwhelming majority of suggestions put forward by organizations such as the BGA and many of the independent alderman, including myself. The only thing he couldn't adopt, and we in the City Council couldn't mandate, is oversight authority over the sister agencies.

(continued) Kyle, one final point. The Infrastructure Trust ordinance merely sets up a mechanism for developing an alternative method of financing infrastructure improvements at a time when the traditional methods of financing are no longer available. No one has ever claimed that the projects the Infrastructure Trust proposes will come without a price tag. Of course there is no free lunch. But given dwindling federal and state resources and the inability of the City to finance big ticket items, this Infrastructure Trust offers us an alternative to not doing anything at all. Ultimately, it will be up to the various governing bodies--the City Council and the various sister agency boards--to determine whether any given project will be worth the price tag.

Carl G, allow me to reiterate what I said to Kyle. The City Council has no authority over the sister agencies--never has and, unless the General Assembly changes the law, never will. To the extent the media and seven dissenting aldermen claim oversight of sister agencies is possible, they are dead wrong. At the risk of beating a dead horse, let me repeat: billions of dollars of infrastructure spending by the CTA, the Board of Education, the Park District, and the Chicago Housing Authority over the years has never been approved by or overseen by the City Council. This Infrastructure Trust ordinance changes absolutely nothing with respect to City Council oversight.

Phoebe, thanks for your question. The funding will come from private equity firms, pension funds and foundations that are looking for a return on their investment. Despite their current economic struggles, municipalities are still viewed as really safe investments. It's one of the reasons interest rates on municipal bonds are so low.

In addition to looking for a return on their investments, some of the investors will be looking to fulfill their missions. For example, a private foundation whose mission is to promote affordable housing might want to invest in a City affordable housing project. A union pension fund may want to invest in any kind of public infrastructure project because it will mean jobs for their members. It's one of the reasons the Chicago Federation of Labor and the trade unions strongly support the Infrastructure Trust proposal.

As I indicated to Kyle above, no one is arguing this will be free money. It's just an alternative way of financing at a time when our usual method of financing--municipal bonds backed by the property taxpayer--is tapped out. The first financing mechanism worked out by the City that will be managed by the Trust is energy retrofits of old City-owned buildings, such as City Hall. The City will use private dollars to finance energy efficiency measures and will pay back the investors through energy cost savings realized by the City.

I'm not saying I have any inside information that this is going to happen, but the long-awaited CTA modernization plan (not the current planed "L" station rehab, but the reconstruction of the entire system north of Belmont), could be financed through an increase in fares. Of course no one wants an increase in fares, but given the paucity of federal support for mass transit, that might be our only option to rebuild our crumbling CTA system and make the trains run on time once again.

As with any major investment, the public and their elected representatives will have to weigh the cost and benefits of these financing arrangements. To use my example above, we may end up deciding that the reconstruction of the Red Line, as good as that would be, is simply not worth the cost of increasing fares on transit riders. But at least the Infrastructure Trust gives us the ability to have that debate and another option we don't currently have to rebuild our infrastructure.

Anyhow, I have no problem conceptually with the idea of an Infrastructure Trust here in Chicago. In fact, Steve Forbes endorsed the idea in his column in Forbes magazine on April 23 of this year, and I greatly admire his combo of financial and public policy acumen. But, we need to be realistic that taxpayer safeguards and transparency must be paramount in the structuring of the Trust. Unfortunately, Chicago is NOT Mayberry. Rahm and the City Council have nothing in common with Sheriff Andy when it comes to being trusted leaders.

There are measures in the ordinance that you voted for that should be of great concern to Chicago residents:

1) The fact that voting members of the Trust must recuse themselves from voting on measures in which they have a “financial interest” is very narrow, as the controlling municipal code that defines this limits a financial interest only to that individual or a spouse/domestic partner. What about the brothers, sisters, sons, daughters, aunts, uncles, etc. of the five voting members with a financial interest in a matter before the Trust?

2)The Mayor gets to appoint all five voting members to the Trust – how does that foster independent decision-making?

3)Politically-motivated Trust staffing and personnel protections are non-existent. Let’s not be naïve in precluding the idea that your colleagues who regularly do as Rahm dictates will find some employment goodies for themselves and their loved ones as Trust staff grows and consulting contracts are awarded.

4)The Trust is subject to the IL Freedom of Information Act (FOIA), but anyone who regularly reads the Trib knows that Rahm hasn’t been very forthcoming with providing documents requested under FOIA – especially vis-à-vis the speed cameras that will be installed around schools and parks!

5)Will there be a Trust website set up so that residents can review matters related to Trust activities and decisions? Will the Trust allow or facilitate the ability of the public to view its 990 federal tax returns?

6)Section 8 of the Ordinance states: “To the extent that any ordinance, resolution or order of the City is in conflict with the provisions of this Ordinance, the provisions of this Ordinance shall be controlling.” So, can you tell us what other City ordinances are now preempted by this one?

"But here’s the problem. For this to work reasonably well, a city has to be smart about how it structures its contracts with private investors. Otherwise, there’s a real possibility that Chicago could pay too much for its infrastructure and, essentially, get fleeced by shrewd investors like Citibank and J.P. Morgan."

This Infrastructure Trust will work out great. Maybe even as well as the parking meter deal.

Admittedly, over time the Chicago City Council has suffered what might be termed a "brain drain" as many members were lost to incarceration in our Federal prison system. But the remaining members are certainly up to the task of continuing the traditions of one party rule that have gotten us where we are today.

Why didn't you hold a public forum to get your constituent's views on this the same way you are doing so with improvements to the Loyola Station? Shouldn't you hear our concerns BEFORE you make your vote and not after?

I too am deeply disappointed at the Alderman's vote of this issue as well as others recently (e.g., speeding cameras). Based on articles and editorials in the Chicago Tribune, comments by the City Inspector General, and various reports on WBEZ, there appears to be a strong consensus that the Trust appears to lack the oversight and transparency to adequately safeguard our economic interests as taxpayers. In the 20 years that I have lived in Chicago, the city council has rarely, if ever, adequately fulfilled it's oversight responsibilities of the executive branch to protect the citizens and has virtually given the mayors a blank check to do as they please. The Council has acted more like a rubber stamp. Additionally, the Press has been inconsistent in living up to its responsibility to investigate and to hold both branches of city government accountable for their actions. By consistently electing and re-electing people to office who end up in jail, we the voters, seem to give tacit approval to the corruption in city government. The line of thinks seems to be as follow: "As long as the city goverment 'delivers,'" we have looked the other way when a scandal occurs.

Now that hard times have hit, the price for our indifference has become all too apparent. Moreover, we cannot escape the fact that we too have failed in our responsibility to elect leaders who consistently protect our interests economically against government officials, corporate executives, and union leaders who seek to enrich themselves at our expense. As a result we end up with endless scandal, a parade of city officials being indicted on charges of corruption and fraud, and privatization deals (like the parking meter scandle) that leave the city in financial straits. "We cannot keep making the same mistakes and expect a different outcome." (Part 1 of 2)

If it were not for Federal Prosecutor, Patrick Fitzgerald, things would be far worse in both our city and state. Under his leadership, the Federal Prosecutor's office has been one of the only institutions protecting the public interest. Since he was placed in this position, he has been "THE GOOD GOVERNMENT GIFT THAT KEEPS GIVING." The problem is, we cannot keep putting all our eggs in Prosecutor Patrick Fitzgerald's basket because the President can replace him at any time. Although Barack Obama has committed to re-appointing Patrick Fitzgerald, Mit Romney has not. Therefore, we could lose one of the few advocates for the public good that we currently have. The city council and the press need to begin to restore the checks on executive power in this city by asking the difficult questions and demanding honest answers.

" Lobby our state reps to amend the Nonprofit Act to create an exception for nonprofit infrastructure trusts allowing for local municipality oversight and making them fully required to follow FOIA."

Could another option be for the Illinois legislature to create a body that approves and oversees the projects and investments with respect to the sister agencies? I don't know all the legalities involved but it seems quite odd that Mayor of locality can enter into a series of agreements that cannot be scrutinized at any other level of government.

A related question is who is going to be crunching the numbers on the deals with the Private Equity groups? This type of thing is High Finance and seems like it would require a lot of expertise that the infrastructure trust board may not have. One of the Articles linked to above indicated that someone on the City sided miscalculated the discount over projected revenues for the parking meter deal and may have undersold the meters for over $1 Billion. It seems like the structure of the board is such that no one is ultimately responsible if something similar happens.

Neighbors haven't we heard all of this in our recent past?We have an emergency, we have to act immediately. Let's just pass this and we can read it later. Hey it gives our State and Federal Supreme Courts something to do. Then of course we get to pay for all of this!

After reading this material I have noticed that we are asked to Trust a great deal, this new ordinance, the elected official who authored it and the other elected officials who confirmed it. Okay I am in. Just as soon as they Trust me enough to incorporate the checks and balances endorsed by the Cities Inspector General and the BGA. If this ordiance is as good as advertised I Trust they would be proud to demonstrate it's open operation to supporters and critics alike.

Joe, your claim (and the mayor's) that the city cannot legally exercise oversight for its sister agencies seems to me a canard here. The fact is, it's the City of Chicago which is setting up the Trust that raises the funds, not the sister agencies themselves. So sure, once the money is given to the sister agencies, City Council cannot have oversight of spending at those agencies. However, the city should have oversight of the funds raised by the Trust that are then given to the sister agencies by the Trust. In other words, the problem has nothing to do with the legality of oversight of the sister agencies; the problem is about how little oversight there will be of the Trust itself.

@John Rogers Park, I intend to respond to all the questions posed to me on this thread about the Infrastructure Trust when time permits me to respond thoughtfully. With respect to your particular issue, both my staff and I have informed you repeatedly that we could not answer your questions because we simply did not have the information you requested. That's why we directed you to the City.

Mr. Alderman before we move on to the Latvian leaders and I know the subject is important. If you could find the time, I know you are busy.1) Answer the questions raised on this site.2) Answer some of the questions raised on the 30 April site Unfunded Pensions.3) Answer the question raised on the 10 May site Recycling.

In a city, state and county where we pay the highest taxes to off set the highest corruption in our country the word trust get stuck in my throat.

Historically Chicago has not produced the most bang for the buck with these endeavors. You know the old saying to know the future just look at the past. Yes we have accomplished many great feats as a city. An exact relevant example, there are many people that live in Chicago that have elected to never own a car and rely on public transit or alternative transportation.

Now they are handed a bill for parking in the form of fees handed to the city as part of a legally binding contract.

Part of that contract guarantees a monopoly on parking in the most lucrative Millenium park and Grant Park parking garages and prohibit developer from incorporating public parking into any new buildings that may be considered for development.

When it comes to elected officials being able to negotiate with seasoned savy investors to strike a fair deal. The city will be worse than the 69 Cubs.

5/2/12, "I intend to respond to all the questions posed to me on this thread about the Infastructure Trust when time permits me to respond thoughtfully If you could also respond to the questions raised on the 4/30/12 thread Unfunded Pensions. The third question reference recycling was answered with a flyer taped to my garbage container a week or so ago.